The Limits Of Free-Market Capitalism
Until a few years ago, my spiritual devotions were limited to the free market and the music of Patsy Cline. I’m sorry to say it’s just me and Patsy now.
Karl Marx may have been wrong where it really mattered—communism, to paraphrase Churchill, is government “of the duds, by the duds, and for the duds”—but he was spot on about the pitfalls of capitalism, particularly when it came to the entrenchment of social classes, the fetish of consumption, the frequency of recession, and the concentration of industry. Yet, like trained seals, we continue to leap through the flaming rings of a system that is contemptuous of the public good while rewarding those who feed off “free” markets and the politicians who rig them. Nearly three years after the global economy almost collapsed under the weight of a corrupt and inbred financial order, Washington is still mired between the false choice of the state or private enterprise as the proper steward of the general welfare.
It should be clear to anyone who has lost a cell phone signal in our nation’s capital or been denied health coverage because of a pre-existing ailment that capitalism’s endgame is not freedom of choice and efficiency, but oligarchy. Many of America’s top industries—agriculture, airlines, media, medical care, banking, defense, auto production, telecommunications—are controlled by a handful of corporations who fix prices like cartels. As Marx predicted, the natural inclination of players in a market-driven economy is not to compete but to collude.
Reporting in Asia and the Middle East for many years, I prayed to the same kitchen gods of untrammeled commerce that now bewitch the Republican Party faithful and the neoliberals who inhabit the Obama White House. In Asia more than a decade ago, I covered the liquidation of state assets as prescribed by the International Monetary Fund, perhaps the largest-ever transfer of wealth from public to private hands, as if it were a new religion that would transform economies from the Korean peninsula to the Indian subcontinent. Laissez-faireism, I wrote, would liberate consumers and domesticate once overweening state-owned enterprises.
In fact, privatization merely shifted economic control from corrupt apparatchiks to their allies in business, a transaction lubricated with kick-backs and sweetheart deals. That’s what happened in the Middle East, and it became the spore that engendered the Arab uprising.
The corruption of capitalism in America is all the more appalling for its legality. With the economy still struggling to recover from a housing crisis fomented largely by Wall Street’s craving for mortgage-backed securities, prosecution of those responsible has been confined to a single lawsuit filed by the Securities Exchange Commission against a lone financier. The system is still lousy with loopholes, and the Republican Party, which demographically as well as ideologically is becoming a gated community for white, southern males, is calling for more deregulation, not less.
Which brings us to the central failure of American capitalism: the excoriation of the state.
So deep is the mythology of the free market that we ignore the consequences of starving our schools, libraries, public media, and roads and railways. We expect our teachers to assume the burdens of parenthood and then blame them for failing education. We lament our dependence on foreign oil and the aviation cartels, but we refuse to underwrite a passenger-rail equivalent of the interstate highway system. We disparage the coarse reductionism of corporate-owned news outlets while neglecting public broadcasting, an isolated archipelago of smart, responsible journalism.
Our hostility to the public sector—fountainhead of the Hoover Dam, Mount Rushmore, the Golden Gate Bridge, the Los Angeles Coliseum, our national parks, and countless other public utilities and services in addition to the federal highway system—is inversely proportional to our reverence for private consumption. As the economist John Kenneth Galbraith wrote in his 1958 book The Affluent Society, “Vacuum cleaners to ensure clean houses are praiseworthy and essential in our standard of living. Street cleaners to ensure clean streets are an unfortunate expense. Partly as a result, our houses are generally clean and our streets are generally filthy.” Galbraith also noted the uniquely American conceit of sanctioning debt when households and private investors hold it but condemning it when governments do.
Should the feds nationalize banks and appropriate soy fields? Certainly not. At its essence, there is probably no more efficient way of establishing the price of a particular good or service than market economics. Not all transactions are so simple, however, and there are some services—healthcare, for example, or transportation—that often fare better more as public goods than as private commodities. In order to save American capitalism, we must appreciate its limits even as we struggle to harness its power.
By: Stephen Glain, U. S. News and World Report, June 2, 2011
Is The Tea Party Killing The Republican Party?
Conservatives are between a rock and a hard place. The Tea Party is in and the GOP is out. Tea Party is a brand that is popular with conservative voters but doesn’t have a national financial base. The Republican Party has a national finance infrastructure but it has been obliterated ideologically by the Tea Party. The emergence of the Tea Party keeps Karl Rove and other D.C. Republicans awake at night. But I’m not losing any sleep because of Karl Rove’s nightmares.
It wouldn’t be the first time in American history that an upstart has killed a party. In the 1840s and 1850s the Whigs gave way to the Republican Party. The old party wouldn’t or couldn’t take a strong antislavery position while Republicans did. The Republicans blossomed as the party of a strong national government while Democrats remained in the GOP’s dust as the party of rebellion and states’ rights. Timing is everything in politics and Democrats continued to fight for state power, right after a war that established the dominance of national power over states’ rights.
Or the opposite may happen. Populism gained favor in the 1890s because of its strong stance against corporate and government corruption but Democrats saved themselves and absorbed the populists by dropping its corporate coziness and becoming a peoples’ party.
And even though the great populist Democrat William Jennings Bryan lost the presidential elections in 1896, 1900 and 1908, the Great Commoner transformed a states’ rights party into a national force that produced the platform for presidential victories by Woodrow Wilson in 1912 and 1916 and by FDR in 1932, 1936, 1940, 1944, and by Harry Truman in 1948.
In the 2010 primary elections, the Tea Party prevailed in just about every race against an establishment Republican congressional candidate. The GOP’s tendency to eat its own young prevented them from winning the Senate in 2010 and may stop win from winning the presidency and the U.S. Senate in 2012.
My guess is the Democratic leader of the Senate offers a daily prayer to the Tea Party. If the Republicans had not nominated Sharron Angle, a Tea Party favorite to oppose him, he would not be a U.S. senator. If the Tea Party hadn’t nominated extremists in Senate campaigns, he wouldn’t be the majority leader if he had been re-elected.
Last year, the GOP nominated Tea Party extremists and consequently lost Senate races in in three states where the party should have won. The candidates were Christine O’Donnell in Delaware, Angle in Nevada and Ken Buck in Colorado. In this cycle, the Tea party is going after moderately conservative GOP senators, Dick Lugar of Indiana and Olympia Snowe in Maine. The Tea Party might very well win both primaries and hand over solid Republican seats to new Democratic senators and allow them to take the Senate back from Republicans.
But I’m not losing any sleep over that either.
By: Brad Brannon, U. S. News and World Report, June 2, 2011
Bad News For Americans Who Eat Food
In December, Americans who eat food received some very good news. A sweeping overhaul of the nation’s food-safety system, approved by both chambers with large, bipartisan majorities, cleared Congress, and was quickly signed into law by President Obama.
The long-overdue law expands the FDA’s ability to recall tainted foods, increases inspections, demands accountability from food companies, and oversees farming — all in the hopes of cracking down on unsafe food before consumers get sick. This was the first time Congress has approved an overhaul of food-safety laws in more than 70 years.
That’s the good news. The bad news is, the Republican-led House is fighting to gut the law.
Budget cuts proposed by House Republicans to the Food and Drug Administration would undermine the agency’s ability to carry out a historic food-safety law passed by Congress just five months ago, food safety advocates say. […]
To carry out the new law, President Obama is seeking $955 million for food safety at the FDA in the fiscal year that starts Oct. 1.
Last week, the House Appropriations subcommittee that oversees the FDA pared back that amount to $750 million, which is $87 million less than the figure the agency is currently receiving for food safety.
“This subcommittee has begun making some of the tough choices necessary to right the ship,” said Chairman Jack Kingston, (R-Ga.).The full committee was scheduled to vote on the proposed cuts Tuesday, and the budget proposal was expected to pass.
Republicans on the House Appropriations Committee approved the cuts yesterday, which are severe enough to prevent the FDA from implementing the new law. Erik Olson, director of food and consumer product safety programs at the Pew Health Group, part of a coalition of public health advocates and food makers, said this week, “These cuts could seriously harm our ability to protect the food supply.”
Boy, those midterm elections really set the country on the right path, didn’t they?
It’s also worth appreciating the fact that these cuts to food safety were made in the name of fiscal responsibility, but it’s a classic example of being penny wise and pound foolish. Indeed, cutting funding on food safety is likely to cost us more money, not less.
I realize this may seem counter-intuitive. I can even imagine some Fox News personality telling viewers, “Those wacky liberals think it costs money to cut spending! What fools!”
But this just requires a little bit of thought. When we cut spending on food safety, we save a little money on inspection, but end up paying a lot of money on health care costs when consumers get sick.
The GOP approach is misguided as a matter of public health, public safety, and budgeting.
By: Steve Benen, Contributing Writer, Washington Monthly, June 1, 2011
Walking Away From The Truth: GOP Playing With Matches On The Debt
Just ignore Tuesday’s vote against raising the debt ceiling, House Republican leaders whispered to Wall Street. We didn’t really vote against it, members suggested; we just sent another of our endless symbolic messages, pretending to take the nation’s credit to the brink of collapse in order to extract the maximum concessions from President Obama.
Once he caves, members said, the debt limit will be raised and the credit scare will end. And the business world apparently got the message. It’s just a “joke,” said a leader of the United States Chamber of Commerce, and Wall Street is in on it. Not everyone found it funny.
No matter how they tried to spin it, 318 House members actually voted against paying the country’s bills and keeping the promise made to federal bondholders. That’s an incredibly dangerous message to send in a softening global economy. Among the jokesters were 236 Republicans playing the politics of extortion, and 82 feckless Democrats who fret that Republicans could transform a courageous vote into a foul-smelling advertisement.
The games that now pass for governing in an increasingly embarrassing 112th Congress are menacing the nation’s future. It was bad enough when Republicans threatened to shut down the government to achieve their extreme and extremely misguided spending cuts, but that threat would have caused temporary damage. The debt limit is something else altogether. If the global credit markets decide that the debt of the United States will regularly be held hostage to ideological demands, it could cause significant harm to investment in long-term bonds and other obligations. That, in turn, could damage domestic credit markets and easily spark another recession.
To prevent this from happening, 114 Democrats in April asked for a “clean” vote without conditions. But Republicans were not about to set their hostage free. Knowing that the clean vote would not pass — and imposing a two-thirds majority requirement to ensure its failure — House Republicans gave the Democrats what they requested. They then voted it down, sending their reckless message to the world.
But there was no excuse for so many Democrats to go along with that message, including the leadership. Steny Hoyer, the minority whip, urged his members to vote no so they would not “subject themselves to a political 30-second ad attack” with all Republicans voting no. Apparently Mr. Hoyer did not trust voters to understand what a dangerous and dishonest game the Republicans are playing.
The exercise has prompted the White House to convene talks to discuss the Republicans’ scattershot demands, which have ranged from trillions in spending cuts to the outright dismantling of vital safety-net programs like Medicare and Medicaid. Democrats have hoped to get an increase in revenues out of any deal, but House Republican leaders emerged from a White House meeting on Wednesday spouting the usual discredited claims that higher taxes on the rich would impede job growth.
What Republicans seem unwilling to acknowledge is that the debt-limit debate is not about future spending. It is about paying for a deficit already incurred because of two wars and tax cuts approved by both Republicans and Democrats at the behest of a Republican president. Tuesday’s vote was a chance to do the right thing and educate the public on why it was necessary. Instead, too many lawmakers walked away from the truth.
Paul Ryan Supported Payment Advisory Boards Before He Was Against Them
During his series of 19 town halls in Wisconsin several weeks ago, Rep. Paul Ryan (R-WI) repeatedly criticized President Obama’s Independent Payment Advisory Board (IPAB) for “rationing” care to seniors, cutting Medicare, and denying care to current retirees. The IPAB is a 15-member commissionthat would make recommendations for lowering Medicare spending to Congress if costs increase beyond a certain point. The reductions would go into effect unless Congress acts to stop them.
“[Obama’s] new health care law…puts a board in charge of cutting costs in Medicare,” Ryan told retirees at one town hall in Kenosha, Wisconsin in late April, arguing that the IPAB would “automatically put price controls in Medicare” and “diminish the quality of care for seniors.”
But as the Incidental Economist’s Don Taylor reports this morning, Ryan has previously introduced legislation that included a very similar board to control health care spending. In 2009, Ryan introduced the Patients’ Choice Act (PCA) which “proposed changing the tax treatment of private health insurance and providing everyone with a refundable tax credit with which to purchase insurance in exchanges” but also sought to establish “two governmental bodies to broadly apply cost effectiveness research in order to develop guidelines to govern the practice of, and payment for, medical care.” Taylor writes that “the bodies proposed in the PCA had more teeth, including provisions to allow for penalties for physicians who did not follow the guidelines, than does the Independent Payment Advisory Board (IPAB) that was passed as part of the Affordable Care Act.” Both the Health Services Commission and Forum for Quality and Effectiveness in Health Care was tasked with developing guidelines and standards for improving health quality and transparency and were afforded what the bill called “enforcement authority”:
(b) ENFORCEMENT AUTHORITY.—The Commissioners, in consultation with the Secretary of Health and Human Services, have the authority to make recommendations to the Secretary to enforce compliance of health care providers with the guidelines, standards, performance measures, and review criteria adopted under subsection(a). Such recommendations may include the following, with respect to a health care provider who is not in compliance with such guidelines, standards, measures, and criteria: (1) Exclusion from participation in Federal health care programs (as defined in section 1128B(f) of the Social Security Act (42 U.S.C.1320a–7b(f))).(2) Imposition of a civil money penalty on such provider
Like the IPAB, Ryan’s board is insulated from Congress and would have allowed true health care cost experts — the Forum for Quality and Effectiveness in Health Care even included 15 individuals, just like the IPAB although they do not appear to require Senate confirmation — to improve the cost effectiveness of the health care system. As Taylor observed back in 2009 when the board was first introduced, “any such effort will undoubtedly be called rationing by those wanting to kill it, and quality improvement and cost-effectiveness by those arguing for it. Whatever we call it, we must begin to look at inflation in the health care system generally and in Medicare in particular.” Little did we know that Ryan would be on both sides of that debate.
By: Igor Volsky, Think Progress, May 13, 2011
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